Md. should allow wine shipment from retailers

Comptroller's recommendation on the practice at odds with facts of his report

December 29, 2010|By Tom Wark

While the recently released Maryland comptroller's report on direct shipment of wine is both welcomed and needed, it contains some highly controversial conclusions, the most important of which is that Maryland consumers ought not be allowed to purchase wine from out-of-state wine stores.

The report is an important and substantial step in clearing the air and injecting a strong set of facts into what has been a long and contentious debate over consumer access to the wine market. However, it must be noted that the report's conclusion that Marylanders be deprived of access to out-of-state wine stores, as well as the published comments by Comptroller Peter Franchot that this kind of prohibition is a good thing, can only be described as anti-consumer, discriminatory and inconsistent with the results of the comptroller's survey.

Perhaps the most controversial statement in the report reads:

"A determination is made that direct wine shipment by out-of-state retailers to Maryland consumers would have a negative effect on in-state licensees, because purchases from retailers are primarily motivated by price."

The report contains no basis for this determination. None. In fact, the survey conducted by the comptroller's office indicates that price is the least important motivator for online purchases of wine, while lack of availability is the most important factor driving the online sale of wine from out-of-state sources.

Furthermore, there is no evidence that those who purchase from online wine retailers have a different set of motivations than those that purchase from out-of-state wineries. Both primarily want access to wines they can't readily find locally.

The fact is that by passing a wine direct shipping bill that allows online purchases from out-of-state wineries but not out-of-state retailers guarantees that Maryland wine lovers will remain without access to a huge swath of the wine market, including small production domestic wines, imported wines, collectible wines, wines available only from auction houses and the large number of wine-of-the-month clubs.

One concern expressed by Comptroller Franchot is that Maryland retailers would suffer from "out-of-state retailers that are undercutting them on price." Yet the comptroller's own report shows that when the cost of shipping is added to the price of wine purchased online, it is practically impossible for a local retailer to be undercut on prices. Furthermore, if a particular product is not readily available to a Maryland consumer at their local retailer, the issue of price undercutting is non-existent.

Maryland legislators who are persuaded to support a direct shipping bill that prohibits wine lovers from purchasing wine from out-of-state wine stores will have to defend a position that is unsupportable given the data and results in the comptroller's report. Furthermore, they will be forced to explain to Maryland wine lovers why they insist on supporting a law that bans them from access to the wines they have so long insisted they want but cannot obtain from local sources.

Wine lovers in a number of states, as well as neighboring Washington, D.C. and Virginia, have benefited for years from being able to buy wines online from out-of-state wineries and out-of-state retailers without any negative consequences to the state. Marylanders deserve the same access to the American wine market without having to suffer from arbitrary bans that serve no purpose other than protecting a small number of businesses from having to compete in a well-regulated but open marketplace.

Tom Wark is executive director of the Specialty Wine Retailers Association. His e-mail is twark@specialtywineretailers.org.

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